Press Briefing by Treasury Secretary Tim Geithner, National Security Advisor Tom Donilon, and Press Secretary Robert Gibbs Previewing the Upcoming State Visit of President Hu of China

Friday, January 14, 2011

Release Time: 

For Immediate Release

James S. Brady Press Briefing Room

See below for clarification to a question (marked with an asterisk) posed in the briefing that required follow up.

*The press coverage of this meeting will be a pool spray at the top.

1:11 P.M. EST

MR. GIBBS:  Good afternoon.  All right, so we got a couple of things today that we’re going to go through.  Let me start with — I will start real quickly with a National Security Council personnel announcement.  I’ll do a very quick week ahead.  We’re going to hear from Secretary Geithner on a couple of topics, namely today is the first day that Americans will begin to see in their paychecks the impact of the payroll tax cut that was part of the overall tax agreement that the President signed at the end of December, so — and have a few comments about China before we then hear from Tom Donilon, the President’s National Security Advisor, who will walk through both the scheduling and some of the top lines on what we will see next week.

But before I do that, I want to make two quick personnel announcements.  Mike Hammer, who many of you know and has been helpful to many of you, is leaving the White House for far greener pastures at the Department of State.  He will be the principal deputy assistant secretary for public affairs.  That then leaves an opening as the National Security Staff spokesperson.  That will be filled by — and I’m very proud to announce — that will be filled by Tommy Vietor.

Q    That’s a surprise.  (Laughter.)  

MR. GIBBS:  So that is –

Q    Is that –

MR. HAMMER:  Please call him on weekends.  (Laughter.)  

Q    The little boy is all grown up.

MR. GIBBS:  Yes.  So that is — I am pleased to make that announcement both — I hired Tommy about two months after I came into the Obama operation, and Mike has been, as he has been to you all, a tremendous resource for all of us here.  We will miss him but he is — he’s leaving the White House to be greatly promoted.  So I think that’s a wonderful thing.

Let me do the quick week ahead and let’s get to Secretary Geithner.  On Monday, the President and the First Lady will participate in a local community service event.  I am of course for security reasons, Ms. Ryan, not going to get into that.

On Tuesday –

Q    A homeless shelter, possibly?

MR. GIBBS:  Say again?

Q    A homeless shelter possibly, or –

MR. GIBBS:  I’m not going to get into that.  It’s good to have you back, Ms. Ryan.

Q    Thank you.

MR. GIBBS:  On Tuesday, the President will attend meetings here at the White House.  On Wednesday — and Tom will get into this more — the President and the First Lady will host President Hu Jintao of the People’s Republic of China for a state visit.  And we’ll save the majority of that for him.

On Thursday, the President will attend meetings here at the White House.  And on Friday, the President will host a reception here at the White House for mayors that are in town for meetings.

And with that, that was quick and abbreviated, but let me turn this over to Secretary Geithner.

SECRETARY GEITHNER:  Nice to see you all.  Tax cuts — it’s important for you all to understand that the power and impact of these tax cuts depends in part on people understanding that they're coming and they're happening.

So we want to highlight the fact today, as Robert said, that tens of millions of Americans get paid today.  And this tax cut, which is $112 billion; it goes to 159 million working families in the country — means on average that people will see their take-home pay go up — average worker — by about $700 this year; average working family by about over $1,000 this year.

I’ll give you an example.  If you think about a married couple in Detroit, a teacher and a mechanic, they're going to see their take-home pay go up by about $1,300 this year.  So this is a very substantial increase in the amount of people — in the amount of cash people see in their pockets, and it makes a big difference for struggling families coming.

And it’s also important to know that this tax package has the largest, most powerful incentive for business investment I think we’ve ever done as a country.  So every business in America this year will be able to fully deduct the cost of buying a new piece of equipment — a new tractor — putting that into service.  And already across the country you're seeing businesses decide how they can best take advantage of this.  But we want to make sure that all businesses know that this is in the package and they can start to take advantage of it.  For the business incentives, it means that roughly 2 million businesses are going to see the cost of an investment fall by about 75 percent.  

Now, the economy was starting to strengthen in the fall, but in significant part because of the impact of this tax package, you're seeing most private economists say the economy this year is likely to grow between 3 and 4 percent and the range of private forecasters have said this package is likely to add about 1.5 million jobs.

Again, I just want to highlight:  The more people understand what's in the package, the more power it's going to have in getting Americans back to work and strengthening the momentum of recovery.

Now, Tom is going to talk about the meetings with China coming up next week, our objectives.  I just want to say a few things on the economic side, because it's very important to understand that this is a relationship that has huge economic benefits to Americans.  You're going to hear us talk very openly and candidly about our concerns and our objectives in the Chinese market, just as you're going to hear the Chinese talk about their concerns and their expectations for how to make sure they have continued access to United States technology, United States markets.

But it's very important to understand that this is a relationship with very substantial economic benefits to the United States.  Last year our exports to China passed the $100 billion mark.  They're growing at about twice the pace of our exports to the rest of the world.  What that means is our exports to China will double in the next four to five years, and that means China is likely to become our largest trading partner sometime roughly 10 years from today.

And already, because of the things we've put in place, the opportunities American companies enjoy in China are expanding quite substantially.  And the relative competitiveness of American companies, American products, American ideas, American services is already moving in our favor, because the Chinese are allowing their currency to now strengthen.  And just one thing to understand about the exchange rate — and I'm sure Tom would like the chance to talk about the technical financial instruments in much more detail –

MR. DONILON:  You’re welcome to the opportunity.  I wouldn’t advise it.  (Laughter.)

SECRETARY GEITHNER:  Be careful when he says that.  No, I want to make sure you understand one thing.  What matters to competitiveness is what happens to inflation and what happens to the value of the currency you can see in the markets every day.  And it's the combined move in the currency and the combined move in inflation rates that affects competitiveness — whether a company wants to buy a good from a Chinese producer or an American producer.  

And if you just look at the trajectory — because Chinese inflation is much more rapid than the United States now; Chinese inflation is probably going to be more than twice, three times U.S. inflation rates for a long time to come — the exchange rates now are appreciating in real terms, which is what matters, at roughly a pace of about 10 percent a year.  

And even though we're in the early stage of that adjustment process, again, one thing about economics and about business that's important to know is that already companies today can look ahead and they see that change coming and they're going to be making investments today based on the expectation — based on this new fundamental reality, which is the competitiveness is going to be shifting now in our favor.

I want to make sure that’s — you understand that because — and understand the benefits in this — because you're going to hear a lot of cooperation in this relationship, a lot of challenge, but it's important to recognize how large the stakes we have and how much we're benefiting from the gains you're seeing in exports already.

Thank you.

MR. GIBBS:  We'll take a couple of quick questions, if anybody has one for Secretary Geithner.


Q    Yes, Secretary, the tax cut package that you have been touting here today, will this in any way cause you to increase your projected GDP growth forecast, and if so to what extent?

SECRETARY GEITHNER:  The forecast that the CBO put out is coming and I won't foreshadow that.  But again, what you should — what we do and what I think your readers should do and people who watch you should do is they should look at what private forecasters are saying.  And if you look at the average of what private forecasters are saying — business economists, et cetera — what they're saying now is that the economy is likely to grow between 3 and 4 percent this year, which is substantially stronger than what people thought this summer, for example.  And that's partly as a result of the tax package and it's partly because the economy was gaining some momentum over the course of the fall.

Q    And you're comfortable with that forecast of 3 to 4 percent?

SECRETARY GEITHNER:  Well, I think it's a good measure of what you're seeing, which is you're seeing a little more confidence, you're seeing a little bit more spark to recovery, and you're seeing people starting to invest and accelerate their hiring plans on that expectation there's going to be growing demand for their products.  And I think that confidence is justified.

Q    On Chinese currency, does the inclusion of inflation mean that the currency is appreciating fast enough for you –

SECRETARY GEITHNER:  Let me try one more time.  The exchange rate has moved about — up about a little over 3 percent since they started to move against the dollar since June of last year.  That's an annual rate of about 6 percent, maybe 7-8 percent a year.  

But that's not the best measure of competitiveness of an American good or service, or American innovation.  It's the combined effect of that change and the difference between China’s inflation rate and ours.  And because Chinese inflation is accelerating, and it’s much more rapid than U.S. inflation, the right measure of the pace of appreciation is now more than 10 percent a year.  And that's a very substantial material change.

The last time China let the currency move over a two-year period, it moved up about 20 percent against the dollar.  And that's a very substantial, meaningful shift.  And it’s important to recognize it’s going to happen.  There’s no doubt it’s going to happen.  The only question for China is whether it happens more through inflation or more through the exchange rate itself.

And again, the important thing is, though, again, even though they're only in the early stage of this process, companies now — because they have to plan ahead — will be making decisions on the reality that that competitive balance is now going to be moving once again in our favor, and that's a good thing.

Q    But by that measure of appreciation, is that sufficient, or there are further steps that the Chinese need to take?

SECRETARY GEITHNER:  Well, again, our view still is — and I think there’s a substantial — and this is in China’s interest — our view is that we still think it’s in China’s interest to let the currency appreciate more rapidly.  And it’s very much in China’s interest that that adjustment that has to come comes more in the exchange rate than inflation because China doesn’t want to see rapid inflation, just like we don't in this case.  And if they continue to try to suppress the rate of growth in the currency itself, the risk they face is they see more inflation.

Nice to see you all.

MR. GIBBS:  April — let’s do April, and then we’ll let –

Q    I want to ask two questions.  One, what are the anticipated questions or conversations on U.S. debt to China?  And also, you said that American exports in the next four to five years will double –


Q    To China, right.  But still, even so, there will still be a vast imbalance of exports from China to here versus U.S. product over there.  So what are you trying to do to bridge that gap and that divide?

SECRETARY GEITHNER:  Well, the most important thing we can do is to make sure that China is growing, they're less reliant on exports, they let their exchange rate move up, and they are providing a more level playing field for American companies operating in China.  And as I said, that's happening.  

But it is important to remember that our economy is much larger than China.  Americans earn much more than does the average Chinese.  And as a result, we still import more from China than we export to China.  But that's a function of the relative size of our economies.  There’s no surprise in that.  And it’s not a reflection of Chinese strength.  It’s really more a reflection of the relative size and strength of our economy still.

Q    All right.  What about the conversation on U.S. debt to China?

SECRETARY GEITHNER:  Oh, there will be no — I mean, nothing — as in any conversation we have with almost any country, we talk about how their economy is doing, what their challenges are, and we talk about our challenges and our policies.

And the Chinese understand that the President is committed to making sure we’re doing things to make this country stronger.  And they understand that to do that, we’re going to have to find ways to make sure we’re spending the taxpayer resources more wisely, spending less, and we’re putting in place the kind of policies to make sure we restore a sense of broad balance to our fiscal position.  The President is committed to that.  No one is going to care more about that than the President and me.

Q    Are you expecting any kind of deliverables or agreements as a result of this visit?

SECRETARY GEITHNER:  That's for Tom.  (Laughter.)

Q    Okay.

Q    Secretary Geithner, can you clarify where discussions are on the tax code?

MR. GIBBS:  I can take that in a second.  Let’s go to Tom.

MR. DONILON:  Thank you all very much, and thanks for taking the time to talk about foreign policy a little bit this afternoon.

Actually, the last time I spoke to this large a group of you, it was in Yokohama, Japan, at the end of our nine-day excursion throughout Asia.  Now that you spoke up, Chip, I do remember your — Chip’s blog the next day saying, well, you know, we’re just going to have to see; only time will tell whether the trip was a success.  Are they going to get the KORUS agreed to, are they going to get exports ramped up in Asia — so I think we did okay on that score.

But I wanted to talk today about the China trip, but I wanted to set it up also.  It’s been an exceedingly busy time for American leadership and national security affairs in the world.  If you think about just the beginning of that trip, the trip that we took to India, Indonesia, South Korea, and Japan leaving on November 5th, if you just look at a number of things that have happened since then, it really is quite extraordinary.  

We did that trip, which was an extraordinary trip, to India, where we fully embraced India’s rise as a great power and a great partner for the United States; Indonesia, with a very important trip there; and then on to the summits in Korea and Japan.  We did come back, all kidding aside, and get agreement on the Korea free trade agreement, which of course will be the second largest trade agreement this country has entered into since NAFTA.

We then went on the next weekend to the Lisbon summit, where we were able to get an agreement on European defense, ballistic missile defense initiative; get agreement there on an overall approach to Afghanistan, setting forth the framework, if you will, the plan for going forward in Afghanistan, beginning transition in the first part of 2011, beginning the U.S. drawdown in the summer of 2011, and turning over complete responsibility for security in Afghanistan to the Afghans by 2014.  

We got endorsements at the summit from very important countries, including the countries that border Russia, for the START agreement, which I think were very important in terms of the debate.  We then went on and worked through our Afghan-Pakistan review and we briefed you all fully on that, obviously.  We had to deal with North Korean provocations during the month of December, in concert with our allies and friends in the region.  “Don’t ask, don’t tell” repeal was passed by the Congress.  Government formation went forward in Iraq, and the Vice President was just there and we made good progress on that.  And finally in the waning hours of the Congress we finished the START treaty.

I lay that out just to indicate the demand for U.S. leadership around the world and the level of activity that the United States is engaged in right now around the world.  And even if you think about the last few days, the Secretary of State has been in the Gulf on a very highly visible and very important trip, including to very important partners there in our counterterrorism efforts.  Secretary Gates has been in Asia — China, Korea, and Japan — in the last few days.  And the Vice President was in Iraq, again, continuing to work on our projects in Iraq, our interests in Iraq, and then on to South Asia in Afghanistan and, again, Pakistan — again, demonstrating the level of activity and the demand for U.S. leadership and the necessity of U.S. leadership around the world.

And that leads us to China.  A state visit — and I’ll take you through the schedule maybe at the top — is a schedule, again, beginning next Tuesday.  A couple of points about this before I go through the details of the schedule.  We have as a strategic matter from the outset of this administration worked very hard to get great power relationships right, with positive, cooperative and comprehensive relationships, as we are seeking with China, with great powers.  A lot is possible in terms of us pursuing our interests and in pursuing global interests.  

And China is a very good example of that.  We’ve concentrated on this very, very carefully — and not to pursue the relationship just through summitry every year, every two years, but rather through a very intense and persistent engagement with the Chinese.  Indeed, I think Secretary Clinton delivered a speech this morning on China, who called it a careful study in dynamic stewardship of the United States-China relationship.  And obviously I’d point you to that as the way to characterize how we go about this.  

The numbers say something about this — this will be the eighth face-to-face meeting between President Obama and President Hu Jintao of China.  He’s also — the President has also met with Premier Wen three times, and that’s in — coming on 24 months now, that pace and intensity of engagement with the Chinese reflects the breadth, depth, and importance of the relationship.

The Chinese — one other lead-in point — the China relationship obviously is also cited in our Asia policy.  And as I’ve talked to a number of you about in other settings here, when we were thinking about our foreign policy in the campaign but also during the transition and coming into office, we got the chance to ask ourselves where were we under-involved, where we were over-involved, how did we want to revise America’s footprint in the world, America’s face to the world.  

And it was our analysis — and it’s an analysis that we acted on from the first days of this administration, when Secretary Clinton was the first Secretary of State since Dean Rusk to have her first trip abroad be to Asia — we came to the conclusion that in fact we had not given Asia, given the historic trends in Asia during the course of the 2000s — I mean, the China rise, the economic dynamism in Asia, the economically most dynamic part of the world — that in fact the United States was under-involved in Asia in terms of presence, involvement, diplomacy, and resources.  And we set about correcting that, and we’ve been doing that, as I said, assiduously since the beginning of the administration.

That has three or four elements to it.  That has sheer presence and activity, and that’s I think reflected in the activity of our most senior diplomats and others in our government.  The President has taken two extensive trips to Asia in November of 2009 and then the trip I referenced earlier in December — November of this year.  It’s reflected in the work we’re doing with our allies in the region, really revitalizing those alliances.

Our alliance with the South Koreans — you know, I am loathe to use kind of hyperbolic terms, but I do think the relationship with the South Koreans is frankly in as good a shape as it’s ever been right now — very solid.  And you saw that through the United States activity and cooperation in the wake of the North Korean provocations, in the wake of the North Koreans essentially killing 50 South Koreans, including 40-something on a corvette ship, the Cheonan, and then four in the islands incident, and us standing shoulder to shoulder with them.  And you saw that manifested not just in words but in deeds with our bringing the George Washington into the Yellow Sea and exercising with the South Koreans.

The Japan alliance is also a cornerstone of our work in Asia and you’ve seen us work very hard on that from the outset of the administration.  A number of you were on our first trip to Asia — Helene and others were on the trip to Japan — and I think if you look at the progress of that alliance, the quality of it since then, you’ve seen I think tremendous improvement — indeed, to the point where Prime Minister Kan, when the President was in Yokohama in November, said that the importance of U.S. presence and leadership in Asia had never been more important.  And we are working well very with the Japanese.  Secretary Gates gave a very important speech yesterday about the importance of the U.S.-Japan alliance, and we’ll be celebrating that alliance’s 50th year this year in the United States.

The third piece of the — our effort there is to engage rising countries in Asia, and that was on display I think in our work on the India-Indonesia trip.  We really have deepened these relationships.

And fourth, our strategy involves building the architecture, if you will, of organizations in Asia.  We’ll be hosting APEC this year, an economic facilitation organization.  We have hosted the ASEAN leaders twice now.  President Obama has hosted the ASEAN leaders twice now.  We are moving in basically kind of at the ground floor the development of the East Asia Summit, and they’ll be — that summit will be this fall in Indonesia.

But it’s a region in need of kind of knitting together — economic, political, and security organizations — and we’re deeply involved in that.  You know, there’s been a debate in the foreign policy circles about how deeply to get into that and whether to wait for them to develop before we get in, and we made a decision to go in, embrace the process, and build it up with full participation by the United States as a Pacific power, as a power in the region that has provided the security out there on which basically the economic miracle has been built.  And every country in the region has benefited by the United States security efforts in that region, including China.

And of course another big piece of this is our relationship with China, the principal power in the region, which is why we have given this so much attention.  It’s interesting — and I’ll go to the schedule.  Sorry, Robert, but, you know, you invite me out, I’ll give them a little –

MR. GIBBS:  Go ahead.

MR. DONLION:  — might as well give them the whole thing.  It’s interesting, as I go through the analysis of our Asia policy and whereas China is cited in that policy, we are absolutely determined — you can tell by the presentation — to meet our commitments and obligations to the countries in the region; to be a reliable partner; to have the resources presence; to be able to support our obligations and relationships with those countries.  We are an important source of security and balance in that region.  

At the same time, those nations — anticipating the question I’m going to get about encircling China and things like that — those nations absolutely count on the United States to engage in a productive, positive relationship with China, to manage that relationship with China, because that’s obviously a very important part of the stability and security in the region.  So that’s where our relationship with China is kind of cited in our overall strategy, and I appreciate your patience for allowing me to go through that.

On the China schedule, as I said, President Hu Jintao and his delegation will arrive on the evening of Tuesday, January 18th, at Andrews Air Force Base.  He’ll be greeted at Andrews by Vice President Biden, Dr. Jill Biden, and the Chief of Protocol, Ambassador Capricia Marshall.  That evening, the President will host a small private dinner for President Hu here at the White House.  That dinner will be attended by the President, myself, and Secretary Clinton.  And the Chinese will similarly have two folks on the other side.  It’s a very unusual — unusually small dinner that we’ll have with President Hu, again reflecting the relationship that we are evolving, and the opportunity to have candid conversation in much less formal settings than you typically would see, frankly, in a meeting between the Chinese and the United States.

Q    Where will the dinner be?

MR. DONILON:  I’m sorry?

Q    Will it be in the residence or in the dining room?

MR. GIBBS:  It is in the Old Family Dining Room in the residence.

Q    Is there an arrival ceremony outside?

MR. DONILON:  I’ll get to that in a second.  Yes, okay.

Q    Not the Vice President at that dinner?

MR. DONILON:  That's right.  That's right.  And again — and the Chinese, of course, will match up similarly on their side, would be my expectation.  I don't want to announce their participants, though, for the reasons you can understand.

Q    I’m sorry, Tom, you said it’s just you and the President and who –

MR. DONILON:  And Secretary Clinton.

Q    With spouses or no?

MR. DONILON:  Not with spouses.

On Wednesday, the 19th, there will be an arrival ceremony on the South Lawn on the morning of the 19th; and then a small bilateral in the Oval Office, the classic pattern here; and then an expanded bilateral meeting in the Cabinet Room.

After the two bilateral meetings, the two Presidents — President Obama and President Hu — will then meet for about 45 minutes with U.S. and Chinese business leaders and CEOs in the Eisenhower Executive Office Building across the way here.

The focus of that discussion will be on ways to expand trade and investment opportunities between our two countries.  There will be American CEOs who have large interests and investments in China.  And I’m sure there will be discussion there about how American business can better do business in China, to talk about the access issues that are so very important and that Secretary Geithner talked about in his speech yesterday.  The Chinese CEOs from prominent Chinese companies who have investments in the United States will talk about their activities here, and how they came to make those investments and create jobs in the United States.

Following the meetings of the CEOs over at the Old Executive Office Building, the two Presidents will have a joint press conference in the East Room of the White House.  Following the press conference, President Hu will then attend the State Department luncheon hosted by Vice President Biden and Secretary Clinton at the State Department, as I said.

And beginning at 6 p.m. that evening, the state dinner will occur here at the White House.  It’s our understanding — and again, go to the Chinese to get the details on this — it’s our understanding then on Wednesday, President Hu will have separate meetings with the leadership of the House and the Senate; will then give a speech at a luncheon hosted by — I don't have my glasses here — hosted by the National Committee on U.S.-China Relations, the U.S.-China Business Council and other organizations.

Following that speech, President Hu will then depart Andrews Air Force Base for a set of events in Chicago the next day.

Q    This is Thursday?

MR. DONILON:  Yes, exactly.  So that's the schedule.  The details Ben and Tommy can get into any of the — you’ve exhausted my knowledge of the schedule.

Q    On the East Room presser, time and how many questions?

MR. GIBBS:  Two and two.

Q    And what time will that be?

MR. GIBBS:  I don't have the exact time.  My guess is, given the schedule that was just written out, that's probably — whatever time I would give you is likely to slip a bit.  But it is two and two.

Q    Meeting with House and Senate leadership is Wednesday afternoon?


Q    What kind of coverage on that meeting with the –

MR. DONILON:  No, I’m sorry — yes, Wednesday.  

Q    No, that's Thursday.

MR. DONILON:  Thursday.  Yes, Thursday — separate meeting with the leaders.

MR. GIBBS:  The coverage on the CEOs we’re working on right now.  I expect that to be over, as Tom said, in EEOB.  And that will be full pool.*

MR. DONILON:  Any other questions on that?  Okay, Jake.

Q    Does it have to be on the China visit or can it be on anything as long as we –

MR. DONILON:  I've got a couple more things to say about the China visit.  But is there anything else on the schedule?

MR. GIBBS:  Yes.

Q    Will there be joint statements announced?  Will there be joint statements announced by the two leaders –

MR. DONILON:  A joint –

Q    Joint statement –

MR. DONILON:  A joint statement — I don't want to comment on that prior to the visit at this point.  Okay?

MR. GIBBS:  Any other schedule things?  Tom will go through some more points, and then we’ll –

MR. DONILON:  Yes, let me just do — and again, you’ve had a lot of our thinking presented to you during the course of this week by the most senior members of the administration — Secretary Geithner’s speech, Secretary Locke’s speech, and then this morning, Secretary Clinton’s speech — which our intent was leading up to the visit to give a comprehensive view of our thoughts and our approach on the relationship.  I’ll just talk about this just a couple more minutes if I might.

MR. GIBBS:  Sure.

MR. DONILON:  The way we kind of think about how to have this conversation with — you asked about the conversation earlier, about how we have this conversation with the Chinese, essentially what the baskets of discussion topics are.  

The first basket is clearly the overall relationship — the tone of that relationship, its purpose, where the areas — where were there areas of cooperation; do we have the right mechanisms in place; and again, and how we see that relationship developing over the next 10 and 15 and 20 years.  That will be a topic of conversation I’m sure at the dinner that the two Presidents will be having, again, in that very small setting on Tuesday evening.

As Secretary Clinton said today, we are going about this in a steady, careful, dynamic way.  We are engaged in how to best pursue a positive, cooperative and contemplative relationship with China, pursuing our interests and pursing interests we think are in the interest of the globe on so-called cross-cutting issues.  That's basket one.

Basket two would be the security and political issues.  And in that basket, we’d — I’d cite three or four right now that have been areas that we have spent an enormous amount of time with the Chinese on during the course of this administration, and I think we’ve actually made quite a bit of progress on, that have been in our interest and I think in the broader interest.

The first, North Korea, obviously, which is a key topic for the visit.  It has been obviously an important issue from the outset of this administration, very important in the last couple of months given the North Korea provocations that we talked about earlier in this discussion.

We have worked with the Chinese on various sanctions regimes around North Korea.  And very importantly in the last couple of months, we have worked — and in the month of December very closely with the Chinese — on encouraging the North Koreans to cease the provocations and to push back towards a diplomatic frame, especially conversation directly between the North and the South.  And we have had I think close cooperation frankly with the Chinese on that and in conjunction with our allies.

The second is Iran and Iran’s nuclear program.  We’ve worked very closely with the Chinese — we worked very closely with the Chinese on the adoption of United Nations Security Council 1929, a comprehensive set of sanctions that have really I think in terms of their effect been — I think have surprised some people.  These sanctions were carefully designed.  And again, working closely with the Chinese, we were able to have the United Nations Security Council resolution put in place.

A third area is Sudan.  And we’ve had a very important set of events this week beginning with the referendum that began on Sunday and runs through Saturday, right — the 15th, yes.  The Chinese had referendum observers and we continue to talk to the Chinese about how to handle the events after the North-South referendum, including the implementation of the CPA.

And the last one I’ll mention, particularly in light of Secretary Gates’ recent visit to China, our mil-mil — military to military relations, which had been cut off in the fall of 2008.  The Chinese military, civilian — the Chinese military and the United States military were not speaking to each other.  

This — if you're trying to build a comprehensive relationship between two of the major powers in the world, that's not a situation that should be allowed to be sustained.  And Secretary Gates made good progress on this, as he said, during his visit to China.  And we have reestablished those — that conversation at the highest level, and we’ll continue to work with the Chinese towards establishing a more regular dialogue on mil-mil relations.  That's the security basket.

The third basket are the economic issues that Secretary Geithner talked about in his speech, and he mentioned to you all today.  Again, three or four aspects to that, as well.  There’s obviously the macroeconomic aspects, currency appreciation and rebalancing efforts that we’ve been working on bilaterally with the Chinese, but also in the context of multilateral organizations like the G20.  There are the whole — there’s a whole basket of access issues, business practice issues that Secretary Geithner talked about in his speech the other day.  

And then we’re engaged in commercial diplomacy, obviously.  And as Secretary Geithner said, probably the best statistic to think about the scale of the — well, the expanding nature of the relationship with China is the export number.  And this year the Chinese are on track to export more than $100 billion of goods and services to China.  And that's set to expand pretty substantially over the next four or five years.

And as Secretary Geithner said, our exports to China are growing at twice the rate of our exports to the rest of the world, underscoring the key point which is the economic relationship between the United States and China provides tremendous benefits to both countries — third basket.

Fourth basket are cross-cutting so called global issues of special concern.  Human rights would fall into that category.  Secretary Clinton addressed that at some length today in her speech.  I think that two of my colleagues briefed you yesterday on the session that the President had with human rights and legal reform leaders focused on China.

So with that, I wanted to give you all — I apologize for taking so long — but to give you all a sense of how we’re thinking about Asia generally and how we’re thinking about this visit specifically.  And I really appreciate your patience.  I’d be glad to take a couple of questions.

MR. GIBBS:  Ben.

Q    Thanks, Tom.  Two questions.  To follow up on human rights, as you mentioned, Secretary Clinton talked about that strongly this morning.  But what does President Obama want to get out of this visit as it relates to that issue?  And when we hear that he’s raised it in these meetings with President Hu, do you ever get the sense that progress is being made?

MR. DONILON:  Well, two or three things.  Number one, the President does raise these issues regularly with the Chinese.  The President stays well — second, the President stays well informed about the dynamics around these issues in China, and indeed asked for a set of outside experts to come in yesterday, as we said.  Third, you saw the President speak out at the time that the Nobel Committee awarded Liu Xiaobo the Nobel Prize, and so speaking out publicly on these issues is also important.

We believe that setting an example here is important too, frankly.  And our efforts to look very hard at our own legal regimes here, including banning torture and other practices, I think are very important in terms of setting an example.  And we pursue a number of dialogues with the Chinese on this subject.  So it’s kind of a short game and a long game, Ben, that involves all those aspects.

Q    There are other areas, like on the economy, Iran, North Korea, where issues are raised in private conversations, when you can sometimes track progress as a result.  Can you do that in human rights?

MR. DONILON:  Well, it’s a mixed picture.  And I think what we should do on that is have you talk to the folks who oversee our human rights dialogue.  Samantha Power here would be the best person to talk to about exactly the details of that dialogue and how they come back at agendas and track the progress.

MR. GIBBS:  Jake.

Q    If I could just change subjects for one quick second, as long as we have you here, if we could get the administration’s response to the events in Tunisia.  And also any sort of indication of what the thinking is when it comes to Lebanon.

MR. DONILON:  Yes, two things.  One is, on Tunisia, I was told literally as I was walking in, that President Ben Ali — it’s been reported, at least — is leaving the –

MR. VIETOR:  We’ve not confirmed that.

MR. DONILON:  Have not confirmed that — okay.  We’ve seen obviously the state media reporting that the President has dismissed the government and has called for legislative elections, and we’re monitoring these developments, Jake.  Obviously in this case we would condemn the ongoing violence in Tunisia, call upon the Tunisian authorities to fulfill the important commitments made by President Ben Ali in his speech yesterday to the Tunisian people, including respect for basic human rights in a process of much needed political reform.  And as President Obama said, each nation gives life to the principle of democracy in its own way, ground in the traditions of its own people, and those countries that respect the rights of their people are stronger and more successful.

On Lebanon, Prime Minister Assad — Hariri was here, point one.  Point two is that the President expressed support for Prime Minister Hariri and his stand on behalf of the special tribunal and its work in pursuit of justice, in terms of bringing to justice those, finding the facts around the killing of his father in 2005.

Next is that we have been pretty deeply involved in diplomacy with key actors in the region and the French around trying to pull together an international group that can support the government of Lebanon as it works through these issues.  As you know, President Suleiman of Lebanon appointed Prime Minister Hariri the caretaker prime minister in Lebanon.  He’ll serve in that role until a new government is formed.  They begin consultations on that new government on Monday.  And again, we’ll be supportive of a peaceful process going forward here.

I would say one last thing, is that Hezbollah’s intentions here with respect to finding the facts and justice have been really kind of laid bare.  And they will have a tough time, I think, continuing to articulate a narrative as a righteous resistance organization if they continue down a path towards undermining a government that is simply trying to support an international effort to find the truth and bring justice in the wake of a murder of a prominent member of that country.

Q    Just a quick follow-up, if you could comment on — some of our allies in the region have questioned the decision to appoint an ambassador to Syria, seeing it as a reward for bad behavior — if you could just comment on that light of recent events.

MR. DONILON:  Absolutely, yes.  We see that — we see the appointment of Robert Ford as the ambassador to Damascus as very much in our own interest.  And the reason is this, Jake:  It’s that every time that we want to have a direct conversation with the leadership of Syria, we shouldn’t have to put together some special delegation to go do that.  That seems like more than it should be, frankly.  And we wanted to have an experienced, tough-minded diplomat, very experienced in the region, on site to be able to make our views known to the government of Syria on a range of issues of importance to the United States and the region.

And so we do not see this as some sort of a reward to the Syrian government.  We rather see it as very much in the U.S. interest in terms of our ability to carry our diplomacy and to advance our interests.

MR. GIBBS:  Chip.

Q    Secretary Geithner suggested that you might be able to address the issue of deliverables or concrete expectations from this.

MR. DONILON:  I would actually not want to get into a lot of speculation on that, Chip, except to say this — because it’s a good question.

As I said earlier in the conversation, we at the outset of the administration made a determination that we were going to engage not in kind of a summitry-oriented or summit-oriented, if you will, approach, but rather to have — again, I don’t have it in front of me here now — but a steady, intensive engagement with the Chinese.  And so that really doesn’t lend itself to every time you meet having some sort of announcement of so-called deliverables.

What it does lend itself to, though, is identifying a set of issues that are important to both countries and continuing to work on them and to play the long haul on each of these things and to try to get real results over time, the kinds of results that you can’t get in just kind of a once-every-six-months or once-every-year conversation between the two Presidents.

What these events do do is they’re action forcing.  They force the governments of each of the countries to identify the most important issues, bring them up here for discussion and in some cases resolution, or designing the next step to go forward here.

So I would focus more on our approach here, which is the not summitry, not kind of these — that you have to have some deliverable with a dollar announced to it — attached to it — but rather trying to make progress on the issues like those I outlined in the four baskets that I laid out.

Q    There was not the kind of staff work there was before the India visit, which was more like a — which was really a summit, to have some kind of result at the end of it?

MR. DONILON:  Yes, but the visit to India was a — was the first visit by an American President to India since 2006, since March of 2006.  There was — that was an effort there where we were really trying to make really kind of a step function increase in the quality of the relationship and had a different set — it just had a different strategic dynamic to it.  Also, the — three days there in India, again, trying to build out each of the aspects of the relationship.  It was a different project.

MR. GIBBS:  Obviously, Chip, too, the commercial and economic relationship between those two countries is obviously fundamentally different and the investment that we saw in American companies represented a fairly decent-size leap in the type of economic relationship that we’ve had with the Indians in trying to put that on a bigger playing field in terms of its citizens.

Q    Robert, has the President spoken with –

Q    Can I just ask one more?  

MR. GIBBS:  Hold on, let’s –

Q    Just last question.  You said earlier that during the transition you undertook this project to see where we were under-involved and where we were over-involved.  Obviously under-involved was Asia.  Could you share with us where we were over-involved?

MR. DONILON:  Well, let me rephrase my own comment.  (Laughter.)  I’d say where we needed to maybe change our emphasis or our approach, and I wouldn’t say over-involved, but I would say that in fact the President said during the campaign and he said at the time he became President that we believe that we should draw down our troops in Iraq, and we’re on track to do that, and to demilitarize that mission, if you will, to change the quality and approach and to move towards a more normal relationship with Iraq, if you will.

Now we have the opportunity, now that they’ve had their elections, they’re forming the government, to do that, so that you would have — you wouldn’t have the kind of United States force we have in Iraq right now.  But that was one — that’s the most obvious example of kind of –

Q    Would Europe be another example?

MR. DONILON:  No, as a matter — Europe would not be another example on that.  And again, as you’ve seen, as I’ve said at the outset, another big thrust that we identified during the course of the campaign and in the transition was that alliances needed really to take — we needed a close look at alliances and to increase the quality of those alliances, to identify important agendas for those.  And I’d say both East and West, with respect to alliances, we’ve done that.  

If you look at Europe, for example — and the Lisbon summit I think is the best example of that — we took issues that have been exceedingly contentious, and through a consultation process, working intensively with the Europeans over the course of over a year and a half, we moved to agreement on a missile defense system that would protect all of Europe, which had been a very contentious issue in Europe, and we got full endorsement of the — formal endorsement by NATO of that system.  We had the Central Europeans, as I said earlier, those countries on the border with Russia endorsing that system.

We obviously had contentious debates again Afghanistan, and indeed, at that Lisbon summit, working with our allies, worked through an agreed-upon plan.  Same thing in Asia, to take a look at those key alliances in Asia and to work through our approach with them and, again, deepen the relationship with Japan, which we discussed earlier, with the Koreans and others and the other allies in Asia.

So I don’t think that’s right with respect to Europe, and indeed, we had a whole — we had a very specific set of goals with respect to Europe that we’ve been pursuing.

MR. GIBBS:  And I would just add to that, the European answer, I think if you look to it, the quality of those relationships throughout the continent were and have been tremendously important.  As Tom said, our mission in Afghanistan is an international mission; it’s not just an American mission, though obviously we provide a — the bulk of troops on the ground.

The quality of those relationships are important in Europe.  And I think, too, if you look at our ability to work with — certainly throughout Europe and in Russia along with China in ensuring that the type of sanctions regime that we now have in place on the Islamic Republic of Iran wasn’t possible two years ago.

The threat was certainly there, and the concept of tightening sanctions was the goal.  What was missing was the relationships in those countries and throughout the Security Council that would enable us to do that.  That's now come to fruition.  And you’ve heard officials throughout the government — throughout our administration this week talk about the genuine practical impacts that those sanctions are having on many sectors in Iran.

MR. DONILON:  Yes, you know, Chip, on that, it’s a longer conversation — and I’ll finish on this.  But the concept of alliances is a very important concept because you develop kind of habits of cooperation and a robust set of common threat assessments.  And we did our own analysis out of power and coming into power.  

And for example, pushing aside an Article V, if you will, determination by NATO to assist in Afghanistan.  In our view, it was a mistake and we tried to go — correct on that, to make this a more — as Robert said exactly, a more alliance-driven process.  And indeed now, going beyond the alliance, right, to other partners in ISAF, 48 countries.  So it’s a longer conversation about coalitions of the willing versus alliances and the qualities that you get in terms of your diplomacy in alliances.  We did a lot of thinking about that and tried to act on that.

MR. GIBBS:  Helene.

Q    Thanks, Robert.  Tom, can I ask you about President Obama’s meeting with President Zardari of Pakistan today?

MR. DONILON:  Yes, absolutely.

Q    Did the subject of North Waziristan come up?  And did President Obama press Mr. Zardari on when the Pakistani government is going to go in there?

MR. DONILON:  Has a readout been provided on the –

MR. HAMMER:  Yes.  


Q    It was very detailed.  (Laughter.)  

Q    Seriously, that was not a readout.

Q    It was three sentences.

MR. DONILON:  I don't want to –

Q    “They met.”  (Laughter.)

MR. DONILON:  Yes, good job, guys.  (Laughter.)  Yes, good first day on the job, Tommy.  (Laughter.)  I’m feeling supported up here.  (Laughter.)  

No, seriously, it was a — Helene, a couple of points on this.  First of all, this was not a full bilateral meeting between the United States and Pakistan.  We asked President Zardari to come over because he’s here on a private visit to attend the memorial service at the Kennedy Center this afternoon for Ambassador Holbrooke.

So it was not a long meeting.  They didn't get into the details of those kinds of military or counterterrorism operations.  They talked about the overall relationship, right, and the United States support for Pakistan.  They talked about the economic situation in Pakistan, and the joint work that we can do to advance economic stability in Pakistan, and which we are doing.   And they talked about — they talked about the blasphemy law, actually, towards the end of that discussion.

Q    Is he coming back to the White House?

MR. DONILON:  I’m sorry, what?

Q    President Zardari coming back to the White House –

Q    I have an alliance question.

MR. DONILON:  Let me — can I please take the question again?

Q    Talking about alliances, you brought up the North Korea provocation last month a few times.  You talked about the close cooperation with China.  I’m wondering if China has done enough though, and what does President Obama want to hear from President Hu on North Korea?

MR. DONILON:  Yes, let me tell you — back that — reel that back for just a couple minutes.  Our closest operational and policy cooperation on that project are with the South Koreans.  So this is the — this is our ally.  We have, as I said — I’ll get the number wrong, but somewhere approaching 30,000 troops on the Korean peninsula.  We have thousands of American citizens in Seoul and throughout South Korea.  And we have a relationship that we’ve been building on.  So that's the principal cooperative mechanism.

Now to your question with respect to China, this has been an important strategic discussion between the United States and China.  And Secretary Gates and Secretary Clinton addressed this — and Secretary Gates out in the region; I know you had a press event with Secretary Clinton at her speech today — and it’s been around the nature of the Korean regime and the nature of the threat, and what that requires the United States to do.  And obviously, we stand with our ally the South Koreans and with the Japanese.

And we understand the Chinese focus on stability on the Korean peninsula.  But we’ve been working with them, frankly, to broaden that analysis and to take into account the analysis that Secretary Clinton laid out in her speech today and Secretary Gates talked about, which is that on the path it’s on right now, yes, the Koreans present a proliferation risk and they present a threat to the region, but they also are on a path to present a very important threat to the United States.  And that analysis needs to be taken into account by the Chinese, and we’ve been working with them on that.

Frankly, I think that that discussion with the Chinese, which was had — it’s interesting — was had quite directly prior to all these provocations during the Seoul meetings between President Obama and President Hu — quite directly on that topic, and I had in private dinners in Asia during the course of November.  That analysis I think has led us to work more closely together, frankly, and I think led to, in part, Chinese efforts to lean on the North Koreans with respect to taking down the provocative acts and to advocate quite directly for talks between the North and the South.

MR. GIBBS:  And let me just — before I go to April here — yes, we hope that President Zardari will make a longer visit later in the year here.

MR. DONILON:  That's a very important point.  Because when President –

Q    Is President –

MR. DONILON:  Excuse me.  But during the course of the discussion, the President obviously made that clear that he was glad that President Zardari would have the time to come over and have a short visit today because he was in town.  And we took advantage of that opportunity.  But the President obviously said to him that we’ll be planning a more formal visit for President Zardari and the Pakistanis here.

We also have the Pakistan-Afghan trilateral meeting here in February.  And we are planning for the next strategic dialogue with the Pakistanis.  Thanks, Robert.

MR. GIBBS:  Yes, let me go to April and then I’ll go to Stephen real fast, and then Tom has got to get to Ambassador Holbrooke’s –

Q    Back on China really fast, you talked about the Sudan.  But is there — and then probably — you didn't say it, but I was wondering if it could possibly come up in conversation or if there is a concern, if it doesn’t come up in conversation, the fact that China is not holding to its commitment and building infrastructure in certain countries in Africa as it deals to — with taking its oil.  Is there a concern with this administration on that?

MR. DONILON:  And the question is, are we concerned about China’s overall approach in Africa?  Is that the –

Q    As it relates to its oil, taking its oil.  It’s not keeping its commitment, building infrastructure in exchange for oil.

MR. DONILON:  I’d have to have a more specific conversation with you about that.  I’d prefer –

Q    Wait, wait, wait — you said — but you are looking into that, or is the administration concerned about that?

MR. DONILON:  Well, I — let me just — I went through the principal issues that we’re going to be discussing in the security basket, and we obviously are concerned about stability and economic growth and the way that economic growth occurs in countries around the world, including in Africa.  But the principal security issues, though — and that’s not to say there won’t be others that could come up in the conversation, but the principal security issues are the ones that I laid out.

MR. GIBBS:  Stephen.

MR. DONILON:  I’m trying to be square with you.

Q    Thanks.

Q    This will be likely President Hu’s last visit, major visit to the U.S., in his current position.  What challenges do you think the handover of power are going to have for your relationship with the Chinese?  And also what challenge do you find from the current fact that there’s more competing sort of centers of power in China now than — you’re not going to just talk to the leader.  I mean, there’s a lot of other influences on policy in relation to the U.S.

MR. DONILON:  That's a very good question and a complicated one.  (Laughter.)  But I mean, point one is this, is that President Hu Jintao is the President of China and is the — and leads their leadership group and has proven to be in our experience a very good interlocutor and represents in our discussions the whole of government on every topic.  And that's — I think that's the first and very important point.

The leadership dynamics there, as you know, it’s two years out in terms of — about two years out in terms of their leadership changeover.  And our approach has been to work with this team on issues that are in front of us right now.  I do think, though, that we have the opportunity in this visit and in subsequent conversations to set the tone and the agenda for the next two years.  And that's part of what we’ll be trying to do during the course of this.

With respect to other voices, the third part of your question, that's a very interesting question, you know?  And there are — again, our observation and our experience has been that President Hu and his team have been very straightforward interlocutors for the United States on behalf of their country.

There are debates, though, that you see in China, particularly in the blogosphere and in newspapers in China about the Chinese approach to their rise and the Chinese approach to the United States.  And following that debate is a very important thing to do, right, and you see the vigor of it if you follow the discussions.

The last thing I’ll say on that is the best evidence of the vigor of that discussion I think is in October People’s Daily 13- or 14-page article by Dai Bingguo.  Dai Bingguo is the state councilor in China and is really the leading person on the security, foreign policy side.   And it was a very interesting piece.  As I said, very lengthy.  I’d ask you all to take a look at it.  And what it did is it kind of reasserted the peaceful rise approach.  It reasserted the Deng Xiaoping maxim of not having kind of a confrontational approach while China was engaged in economic development and pursuing its stability.  And I think it can read really as a definitive statement at this point of the leadership’s approach to foreign policy generally and the United States specifically.

You all have been great.  I really appreciate it.  Thank you.

Q    Thank you.

MR. DONILON:  Chip, I apologize.  I could not resist at the top.  (Laughter.)

Q    I’ll have to go back and read it.

MR. DONILON:  Yes, I read your blog.  That's the good news.

Q    It gets a little snarky at times.  (Laughter.)  

2:09 P.M. EST

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